Kudrin Returns?

The announcement that former Russian Finance Minister Alexey Kudrin has been appointed deputy head of Russian President Putin’s Council of Economic Advisers has provoked a stir.

This is not surprising. Few individuals in Russian politics polarise opinion as strongly as Kudrin does.

Kudrin’s admirers are to be found in the business community, amongst liberal economists and amongst people of generally elite backgrounds and liberal views. Amongst people of this sort Kudrin’s reputation is of the highest.

The wider Russian population – to the extent it is aware of him – however views Kudrin very differently, whilst his name is anathema across the very large “patriotic/left wing” section of Russia’s political spectrum

So who is Alexey Kudrin and why does he arouse such strong feelings? Kudrin was Russia’s Finance Minister from 2000 to 2011 as well as the Deputy Prime Minister in overall charge of the economy from 2007 to 2011.

Amongst his liberal admirers Kudrin is the official who is widely credited with engineering the economic boom Russia experienced during Putin’s first two terms as President. He is lauded for his rigidly orthodox free market economic thinking, his tight fiscal management, his refusal to run deficits, and for Russia’s early repayment of its sovereign debt just a few years after its humiliating default in 1998.

Above all he is credited with the creation of Russia’s two national savings funds, the Reserve Fund, which funds the national budget when it is in deficit, and the National Welfare Fund, which acts as Russia’s sovereign wealth fund.

Kudrin’s glowing reputation amongst people of elite and liberal backgrounds both in Russia and abroad is well illustrated by the awards they have showered on him.

He was named “Best Finance Minister of the Year 2005” by The Banker magazine, “Best Finance Minister of a Developing European Country”; in 2006 by the Emerging Markets newspaper (a journal published by the IMF and the World Bank) and “Best Finance Minister of the Year 2010” by Euromoney magazine.

Kudrin’s Russian critics have a very different view of him. They see him as a doctrinaire laissez faire Atlanticist, as the Finance Minister whose dogmatic insistence on cutting spending strangled the economy, causing its productive sectors to wither away as money which should have been used for investment was instead accumulated uselessly, becoming “dead money” in the two Funds.

In addition many Russians have not forgotten or forgiven Kudrin’s monetisation in 2005 of many of their Soviet era social security benefits, turning them from benefits in kind into benefits paid in money.

Given Russia’s historically high inflation and its two periods of hyperinflation in the 1990s this understandably was a very unpopular move and one which provoked widespread protests. Though in the West these protests are largely forgotten, they actually involved more people than the much better known protests which took place during the election season in 2011-2012.

Kudrin is also known to be a supporter of increasing the pension age – another reform that is for equally understandable reasons also very unpopular with many Russians. Beyond these very practical criticisms, much of the hostility to Kudrin within Russia has a distinct ideological hue.

In a country where opinion polls show a clear majority of the population favours a planned economy it is unsurprising that the man who was known as the most prominent economic liberal in the government became unpopular with many people. Russians also tend to conflate support for liberal economic policies with pro-Western political positions. As Russia’s relations with the West have deteriorated this has inevitably exposed economic liberals like Kudrin to charges that they are part of a pro-Western Fifth Column. In Kudrin’s case some of his actions have lent force to these fears.

Lastly but crucially, for many Russians an economic liberal like Kudrin who supports private business and private enterprise is almost by definition an apologist for the system that created the oligarchs – the hated class of plutocrats who emerged in Russia during the corrupt privatisations of the 1990s.

All these factors taken together explain why the individual who in the West was the most highly regarded official of Putin’s government in Russia is one of its least popular. The truth about Kudrin is that both the praise he gets and some – though not all – the criticism is overdone.

Kudrin as Finance Minister did indeed run a tight ship. He did indeed create the two Funds which did indeed help keep the economy stable by financing the budget deficit after the financial crash of 2008.

However the praise for Kudrin’s tight fiscal management ignores the fact that fiscal policy has been no loser since he left the government in 2011. On the contrary the high oil prices in 2012 and 2013 enabled the government to avoid running deficits in those years even though Kudrin before his dismissal had actually planned for them.

Since then the government has managed to run lower deficits during the current recession than those Kudrin ran and planned for during the 2008 crisis. In 2015 the federal deficit was just 2.4% of GDP and though it will probably be higher this year the target is still 3% of GDP.

If Kudrin is a fiscal conservative and a supporter of balanced budgets the record shows his successors also are. In the Russian government and in the Finance Ministry, Kudrin’s fiscal conservatism is not the exception. It is the rule.

This point about Kudrin that is consistently overlooked by his admirers is that whilst he was a member of the government he worked as part of a team. The head of that team was not Kudrin but Putin.

It is Putin not Kudrin who must ultimately take the credit – or blame – for the tough fiscal discipline of the Kudrin years. It is because of Putin’s heavy emphasis on budget discipline that budget spending has continued to be tight since Kudrin left the government in 2011. It was also Putin more than Kudrin who insisted on early repayment of Russia’s debt.

As for the idea of setting up the two Funds, credit – or blame – for that does belong to Kudrin. However it could not have happened without Putin’s support. One must resist the temptation – irresistible to Kudrin’s admirers – of giving Kudrin all the credit for everything that went right under his watch whilst putting all the blame on Putin for everything that went wrong.

If one believes that keeping tight control of budget spending, accumulating reserves and paying off debt is the hallmark of a good manager, then the record shows the good manager in Russia’s case is Putin not Kudrin and that it is Putin not Kudrin who should be given the credit.

In fact Kudrin’s record as an economic manager is decidedly mixed. It is certainly true that Russia’s economy grew rapidly during Putin’s first two terms when Kudrin was Finance Minister and that Kudrin’s success in restoring order to Russia’s previously chaotic budget played a role in this.

However though Kudrin – with Putin’s support – kept a tight lid on government spending he was far too complacent about the borrowing and spending binge Russian companies were cranking up towards in the years immediately prior to the 2008 financial crash.

Several commentators warned at the time that the credit build-up – much of it in foreign currency loans from Western banks – was getting out of control. However the mounting concern appears to have passed Kudrin completely by. Presumably as an economic liberal and as a believer in the virtues of free enterprise he found it difficult to believe the private sector could do wrong.

The result was that the country found itself dangerously exposed in the weeks and months following the financial crash of 2008 as Western banks at the urging of their own central banks scrambled to get cash out of Russia as fast as they could by calling in their loans.

Money poured out of the country putting the very existence of some of the country’s biggest companies at risk. The panic fed on itself as investors then also began to pull out of Russian companies causing Russia’s two stock markets to crash. For a few terrifying weeks it looked as if the entire economy was about to collapse.

In the event the reserves Kudrin and Putin had built up in the previous years proved sufficient to avert disaster, though the single thing that saved the economy… from a much more severe crisis was the sharp recovery in oil prices that took place in the spring of 2009.

Kudrin was obviously not solely to blame for all this. However as the country’s Finance Minister and as the man in overall charge of the economy he must bear the principal blame. At a crucial moment he took his eye off the ball and it was as much a matter of good luck as of good management that the country came through.

By contrast one of the reasons why the Russian economy has proved so resilient in the face of the sanctions and the 2014 oil price collapse is precisely because the lesson of those terrible months in 2008 and 2009 has been learnt. Instead of resuming their wild borrowing and spending spree when the crisis abated Russian companies and businesses instead – at the urging of their government – reined their borrowing and spending in as they moved to hedge and consolidate their positions.

The result was that this time round with the help of a certain amount of support from the government and the Central Bank they have been able to meet their debt obligations without undue strain and without the economy spiralling into crisis.

I would add in passing that the much discussed fall in the Russian growth rate since 2012 is in part a consequence of this process. Reining in borrowing and spending and consolidating positions has inevitably led to a cut in investment causing growth to slow. In other words the frenetic growth of the immediate period prior to the 2008 crash (which touched an annualised rate of 9% in the months preceding the crash) has had to be paid for by a lower growth rate since then.

None of these points are ever made by Kudrin’s admirers, just as when they claim – as they often do – that the Russian economy has been badly managed during Putin’s period as President so that the economy is supposedly insufficiently diversified they somehow manage to forget who was actually in charge of the economy during most of the time that Putin has been President.

This same exercise in selective memory comes up whenever the circumstances of Kudrin’s leaving the government are discussed. Kudrin’s admirers tend to claim that Kudrin left the government because of disagreements between him and Putin over defence spending. Kudrin supposedly was unhappy that defence spending was getting out of control and was becoming unaffordable. Putin supposedly refused to listen and

Kudrin therefore left the government rather than carry out a policy he considered irrational and unrealistic. No part of this is true. The true reason Kudrin was dismissed from the government was not because there was a row between him and Putin over defence spending. Kudrin was dismissed from the government because he made public his strong disagreement with Putin’s decision to appoint Dmitry Medvedev Prime Minister after the so-called “tandem switch” in 2011 when Putin and Medvedev swapped jobs, with Medvedev stepping aside from the Presidency to allow Putin to stand for the Presidency in the 2012 Presidential election and Putin in return nominating Medvedev to be his Prime Minister.

What is strange about the claims Kudrin quit the government over defence spending is that his row with Medvedev which led to his dismissal was carried out in the most public way imaginable on national television for everyone to see. Kudrin started it all by saying on US television that he would not be able to stay in the government if Medvedev was appointed Prime Minister. There was then a public row between Medvedev and Kudrin in Russia shown in full view on national television during which an ashen-faced Kudrin asked for time to speak to Putin only to be sacked by Medvedev on the spot.

The issue of defence spending came up incidentally during the row as Kudrin searched for a reason to justify his objection to Medvedev’s becoming Prime Minister. The reason he hit upon was that he disagreed with Medvedev’s commitment to higher defence spending. He did not however exactly say it was completely unaffordable. Rather he said he wanted to spend more money on education instead.

As to the reasons for Kudrin’s objections to Medvedev’s appointment those to this day remain unclear. There were suggestions Kudrin was disappointed not to have been appointed Prime Minister himself.

There were also suggestions that he had come in for some criticism from within the government for his failure to foresee and pre-empt the 2008 financial crisis (see above) and that his position was already becoming shaky and that this provoked him to lash out.

It seems there was also a plan hatched by someone in the government (probably the Kremlin spin-doctor Vladislav Surkov) for Kudrin to leave the government to head a loyalist liberal pseudo-opposition party. It seems that Kudrin was unenthusiastic about this idea. However the fact it was floated at all shows that at the time of his dismissal the idea of Kudrin leaving the government was already in the air.

The true reason for Kudrin’s row with Medvedev is in fact obvious to anyone who watches the television film of their row: the two men detest each other. Quite why they do is unknown. Possibly it was rivalry for Putin’s favour and resentment by Kudrin that Medvedev – whom he obviously considers his inferior – was stealing a march on him.

Kudrin’s and Medvedev’s mutual dislike does however show one thing. This is that there is no united liberal Atlanticist bloc inside the government. At the time of their row Medvedev and Kudrin were widely credited with being the two most prominent liberal Atlanticists in the government.

Their all too evident mutual dislike however makes it all but inconceivable that they could forge a united front together. Having managed to get himself thrown out of the government in the most public way imaginable Kudrin then committed an action that deeply angered his former colleagues in the government and which has ever since fuelled widespread distrust of him in the country.

During the protests that followed the parliamentary elections in December 2011 Kudrin turned up and spoke at a liberal opposition rally on Sakharov Avenue in Moscow. By doing so he appeared to burn his bridges with the government and seemed to be aligning himself with the pro-Western liberal opposition against Putin.

Kudrin’s speech at the Sakharov Avenue rally in fact demonstrated something else: Kudrin’s complete lack of the most basic political skills needed by a successful politician. His speech at the rally was by common consent a disaster – a boring lecture from a former academic and technocrat that turned everybody off – very far from the rallying cry the situation demanded.

From that moment it was obvious to everyone including Kudrin himself that he could never successfully lead a political party or make himself a significant political force and that he represented no conceivable political threat or challenge either to Putin or to the government.

That realisation almost certainly explains Kudrin’s actions since then. Having realised that he had `no future as an opposition leader he began instead to try to work himself back into Putin’s favour.

The story of Kudrin’s career since then has been one of constant lobbying both by himself and by his supporters to bring him back into the government. Though during this period he regularly made coded criticisms of the government he always stopped short of direct attacks on it. The impression he gave was of someone who wanted the government to succeed but thought it was not being reformist enough. As is often the case with those in Russia who call for more reform he was vague about what was the reform he wanted but he tended to give the impression that he wanted to cut budget spending even more and wanted to raise the pension age.

It seems Kudrin finally persuaded Putin some months ago to bring him back and that the one issue that delayed his return was disagreement about the post he would be given.

In the event the post Kudrin was eventually given – deputy head of Putin’s Council of Economic Advisers – though important is advisory and hardly compares with the posts of Deputy Prime Minister and Finance Minister he held before he was sacked in 2011. If Kudrin held out for a more important position -as is likely – then he clearly didn’t get it. In fact it seems that both Medvedev and Sergey Ivanov (Putin’s Chief of Staff) vetoed any possibility of Kudrin being given executive posts either in government or in the Presidential Administration.

Why then did Putin bring Kudrin back?

There may have been an element… of political calculation behind the decision. Though Kudrin’s new post is hardly one of key importance his reappointment does carry important symbolism. It could be intended as a gesture to the West – where Kudrin is held in high regard – at a time when the anti-Russian policy the US and the EU have been following has been coming under increasing challenge.

More cynically, bringing Kudrin back into the fold might have been intended to keep him quiet and onside in the run-up to the pending parliamentary elections this autumn. More practically, it seems Kudrin is being asked to work on a national economic plan. Almost certainly this will include a recommendation to raise the pension age – a deeply unpopular measure which Putin is known however to have come round to. Possibly Putin is using Kudrin for political cover – looking to Kudrin to recommend an unpopular reform Putin realises is needed whilst setting Kudrin up as the fall guy who will take the flak if or rather when the measure is opposed.

However beyond these tough-minded political calculations personal factors have probably also played an important role. One must put aside the idea of major ideological differences between Putin and Kudrin. To the constant dismay of most of his supporters Putin’s record shows that he is a convinced economic liberal. Putin has never shown the slightest inclination to row back on the market reforms Russia has followed since the USSR’s collapse. If Kudrin is an economic liberal then the record shows Putin is one too.

As for Kudrin he is not quite the doctrinaire liberal or Atlanticist he is sometimes made out to be. He supported Putin’s action against Khodorkovsky and Yukos in 2004. As Deputy Prime Minister and Finance Minister he supported investment in Russia’s infrastructure. He also voiced support for the government’s policy of creating national champions in specific sectors of the economy.

Though a supporter of privatisation he never made this a fetish of his policy. Kudrin has also been careful not to challenge openly Putin’s foreign policy. Whatever his private thoughts on the matter he has never spoken out publicly against Crimea’s reunification with Russia. He surely knows that both for Putin and for the Russian public this question has become the touchstone of loyalty to the country.

Not only is there therefore enough common ground for Putin and Kudrin to work together in the future but there is a long history of close friendship and collaboration between them. Both Kudrin and Putin worked together in St. Petersburg in the 1990s for the city’s then mayor Anatoly Sobchak. Both Kudrin and Putin were then transferred to the Presidential Administration in Moscow when Sobchak failed to gain re-election in 1996. When Putin became the country’s President in 2000 he appointed Kudrin his Finance Minister and backed him in that post thereafter.

If there is one consistent pattern to Putin’s career it is his fierce loyalty to his friends even when – as in Kudrin’s case – that loyalty has not been fully reciprocated. It is probably Putin’s sense of friendship and loyalty to Kudrin which more than anything else explains his decision to bring him back.

Whether Putin’s feelings of friendship and loyalty to Kudrin will be enough to outweigh Kudrin’s unpopularity in the country and with many of his colleagues is another matter. On balance it is unlikely. However by bringing Kudrin back Putin has brought back into the fold an old friend and collaborator with a history of loyal service.

Should Putin decide to take a more liberal turn in managing the economy after the 2018 election Kudrin is there to help him take it. Whilst perennial rumours that Kudrin will become Prime Minister in place of Medvedev are probably misplaced, it is very much in character of Putin to move to keep his options open, and by bringing Kudrin back he has done just that.

The Essential Saker: from the trenches of the emerging multipolar world

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Putin should appoint Kudrin … to a high-level position as the Deputy Head of Public Toilets to ensure that all the pro-Western liberals and their Atlanticist bankster buddies have a well-deserved place in society.

When all is said and done this still has to Remain the same tired old world of inequity. Fight your stupid little wars, patriotic thralls, Volodia’s gang of bloodsucking elites needs another golden dome on top of that cathedral (or maybe a larger champagne bottle for winners of Formula 1 – whichever spectacle proves the best recipe for shallowing the populace’s spirit with multi-camera extravaganza).

The magnitude of their “grandeur” is the measure of your lives wasted into oblivion. You are not building a great nation, just buy into false visions of an alternative civilization by those that do everything in their power to engineer its perpetual non-existence.

Spot on..
I am sick with disgust myself and lost faith in PUtin.
The last straw was the reteat from SYria, touted as a ‘huge diplomatic victory’.
THe great victoy is terrorists and traitors sitting in Geneve for ‘talks’, the only language that excrement understands is death by violent means. Dear leader caved in, and all Lavrov can do is to whine uselessly to the Americans, as they gave a damn, they don’t talk ,just give orders to vassals.
As for Donbass, women and chldren still get maimed by Nazi shells, which is OK for Americans: only bad nazis are the ones that kill jews, good nazis kill Russians, just like there are good and bad terrorists.

Cannot agree more, ussia is fallnig into the same vapid idiocy as the West, while pUtin has Formula 2, the latest films show fights between ‘super-heroes’and reverence for transgender Bruce /Caitlyn Jenner.
I started doubting dear leader when he retreated from Donbass and sent home troops amassed behind the Russian border with the consequences we all know, Uko-nazis no longer feared the deterrent posed by the mighty RUssians and engaged in what they do best:: atrocities, like the fire in Odessa, a sacred city for many Russians.
Then to compound it all, dear leader surprised everybody with a ‘huge diplomatic victory’, by retreating from Syria, thus emboldening the Turks and the terrorists. The Syrian army is short on men and equipment, this retreat is untimely. Moreover the victory on the diplomatic front resulted in terrorists and Saudi-bought traitors sitting in Geneva and throwing tantrums. Nothing can be expected from those talks, except more civilian suffering. These animals don’t talk, the only language they understand is death by violent means, they should be treted the same way, dear leader is pandering to the degenerate West.

Hi Dennis, You’ve wandered from your table at the cafe, I see. Penetrated without desecration? Is that kind of like being a little pregnant? Here let me add some more brandy to your coffee. Please do not be insulted… I am playing with you oops…it is not foreplay….I know where your mind is going, going gone!

Mostly I think that women view this as an opening of themselves and a enfolding but then I do neither raunchy well nor high brow poetic so I’d best beat a hasty retreat to the cafe where I can torment the very serious mundomaniac whom I adore for all the world archetypes bouncing around in his mind which he marshals up so well. Steiner esoteric tradition perhaps? don’t know ..he seems to resent labels so I*’d best behave.

Kudrin. scholarly technocrats are of great use to those worldly priests ( Putin) who have the big picture and charisma to move masses into making history for good or ill ( Trump, another Priest). Thank you Mercouris for the well developed and excellently presented essay. I already have your new site theduran.com on my quick list/dashboard. Putin will probably put Kudrin to work overseeing the next 5 year plan or whatever they are calling it these days. Perhaps Kudrin is a fren-emy? so he is sure to keep him close.

Thanks, you made me laugh. I needed that. I like your style but not sure of the meaning. It doesn’t matter. I’m tired and coming apart at the seams. I wish this was the cafe so I could fall on the floor and kick and scream with despair. I am still laughing. What the hell did you send over the wireless? Good night. All I want is love and all I ever get is: “One moment while I put you on hold.”

”To the constant dismay of most of his supporters Putin’s record shows that he is a convinced economic liberal. Putin has never shown the slightest inclination to row back on the market reforms Russia has followed since the USSR’s collapse. If Kudrin is an economic liberal then the record shows Putin is one too.”

Spot on, and the Achilles heel of Russia’s economic and foreign policy. The United States controls the world’s economic and financial institutions. This gives it a decisive advantage in its hyrbid war against Russia. This insofar as it can mount speculative attacks against the country’s currency, it also leaves the door open for capital flight from Russia to safe havens in US Treasurys and accounts in Swiss Banks. Thus the reserve status of the US $ makes it possible – through institutions such as the WTO, World Bank and most importantly the IMF endows it with the capacity to wage financial/economic war against all the BRIC nations – has as been instanced in the case of Brazil. Russia is in a group of countries which are subject to the movements of the dollar which they neither print or control. Russia cannot win the hybrid war if it continues to play by the rules that the US and its allies set.

Or maybe I am missing something and there is some cunning plan afoot. I doubt it though.

I tend to agree with this. Putin’s foreign policy is little short of brilliant; I am sure there is method even in his pullback vis-a-vis Syria. But his economic policy is not, IMO. It’s not terrible–he is not a doctrinaire free marketeer by any means. I expect he would consider himself a pragmatist, enabling government intervention when needed. But he operates broadly within the assumptions of modern mainstream economic ideas.

There are a number of problems with this. One is that they cause poverty and injustice. Another is that they are false and, indeed, a strong case can be made that they represent less a genuine economic theory than a sort of con job intended to promote policies useful to certain elite groups by pretending they are useful to various other groups or essential to general economic growth. An implication of this last point, perhaps more important to Vladimir Putin, is that the policies involved are specifically for the benefit of international, not Russian, elites. Mainstream economic policies, neoliberal policies, financialist policies, systematically make it difficult to create economic independence for a country, but rather enable the looting of a country’s assets by transnational capital. And in the current environment, “transnational capital” translates strongly in to “the United States and its lackeys”.

Thus Putin’s domestic economic policy is going to have an overall tendency to hobble and probably ultimately negate the successes of his foreign policy. His pragmatic assistance to local industry and so forth, and his attempts to minimize corruption, will slow down this process but cannot in my opinion negate the overall structure he is working with. If things continue as they have been going, I think Russia’s main chance to remain independent is if the world financial system collapses soon and thoroughly . . . which is fairly likely.

“leaves the door open for capital flight from Russia to safe havens in US Treasurys and accounts in Swiss Banks.”

Lets not forget the reverse corollary of this one. It can shut the door to the capital leaving its “safe haven” , as has already been show. Hence the West is not a Safe Haven. Anyone thinking that is not well informed.

A very interesting and well-written article. Could it be that another factor in bringing back Kudrin might consist of keeping Medvedev in check? Should things get rough especially in connection with the September election, Medvedev might be less inclined to challenge Putin now that Kudrin as his ready-made replacement will be sitting visibly on the fence again. Kudrin’s liberal reputation will also help keeping the loyalty of the entrepreneurial class up, or rather its disloyalty down, in case Western sanctions are not lifted anytime soon. Contrary to what many in this forum seem to believe, Russia does need this entrepreneurial class to provide the goods and services that a Soviet-style planned economy is bad at producing. Without them, discontent within the general population would rise rapidly, costing the Putin government its popularity and possibly creating the preconditions of a color revolution.

Its not that we don’t understand that. Its that we reject it as false. Russia is the World’s largest (by far) nation. She has almost double the population of any of the EU member states (including the powerhouse Germany). She has a well educated population,in the main very loyal to the nation. Much of the World’s untouched natural resources lay in Russia.And yet with all that (and more I haven’t mentioned), Russia isn’t the leading economic power in the World. There are a lot of complicated reasons of course why that isn’t so. But one of the main ones is the looting (continuing looting) of the economic wealth by the oligarchs and foreign business interests.That was, and is, allowed by the “liberal” free-market capitalism that Russian leaders, “still” refuse to stop,and thus allow the theft of ever more wealth from their people. Citizens (and in many cases now ex-citizens) of Russia contributed much to the technological development in the World (look at the names of leading ,inventors,technicians,etc,in the World. And the numbers of “Russians” is astounding). But much of that isn’t done in Russia. Those people have left Russia to be able to find work abroad. Every time that happens it is a failure of Russia’s leadership.

Russia is a temperate climate country (much of it). Any and every type of crop able to be produced in that climate could (should) be produced in Russia. And yet in 2016, only “now”,because of the sanctions,is that being worked on.She is a leader (if not the leader) in oil and gas exporting in the World. Anything to do with those industries should, from the start to the finish be produced in Russia. And yet we read that sanctions don’t allow the “import” of some Western produced machinery for those industries. Why on earth should Russia need to “import” even one “screw” for a machine connected to those industries. That once again is a “failure” of the government in allowing that situation.We could turn to the aircraft industry. The largest nation in the World,that was a leader 25 years ago in aviation. Now “imports” foreign aircraft for her commercial aviation. The largest nation in the World,that “runs” on her railroads. Desperately needed to cover those huge distances. And yet instead of exporting trains to the World. And having the most up to date rail transportation in the World. Is only now building a high-speed railroad. Those are common throughout Europe and Asia (where with the distances they aren’t nearly as needed).I could go on endlessly,electronics,automobiles,computers,etc,etc,etc. Imported from abroad. The question contained in those famous 20th Century Soviet written speeches,”What is to be done”,needs to be asked again.The products that Russia does specialize in are World class,armaments,engines,etc. The problem is there are not nearly enough. And that again is a failure of the governments economic policy (today 20 years late, something’s are changing slowly).But every time a Russian citizen goes to a store and see’s the shelves packed with foreign products, able to be made in Russia,there is an example of that failure,brought home clearly to their eyes.

Alexander Mercouris touched on all that in this great article. But still we have the same problem before us. Why does that continue. Why is Russia not the powerhouse of industry she was 25 years ago (and should be today). And most importantly,what will it take to change that. Certainly not bringing someone like Kudrin even deeper into the government. So once again we are left with the question “What is to be done”.

I so resonate with that. You said it as well as it can be said. I don’t know by experience. I’m just getting the feel of the words and they sound true. Something is not right in Russia. I’m kind of an hurrah pro-Russian romantic but your words sound like reality. Thanks.

Thanks Dennis. I’m a pro-Russian Romanticist as well. But I believe we have to face facts,to be able to overcome problems. There is a lot of work to be down. Some would like to pretend the problems don’t exist. But that does nothing good for Russia. Only an honest dealing with issues that harm Russia, can help overcome them. The “kicking the can down the road” for 25 years ,only brings us to the problems we face now. Its time to “pick the can up,clean it off,and refill it “.

Good Points Bob.
However as I know this sector let me point out something. The Oil and Gas industry in the days of Cold War was basically behind a wall and did not have the “drive” to be more efficient hence did not develop technology to do this. When the wall came down they were 20 or more years behind. To produce components and tools such as thesehttp://www.netl.doe.gov/research/coal/crosscutting/pwmis/tech-desc/downsep
took years of optimizing and developing. To do this from scratch I say is a tough choice. To buy the patent , again I don’t know enough to answer this one but I suspect the West would make it difficult if not impossible. Hence your stuck, you buy from them and perhaps force them to make them in Russia. I could go on but I think you get the idea. Not so simple.

The Oil and Gas industry is a long chain of just such components that must fit together to work. To do it yourself would take many years of trial and error as this stuff must work in EXTREME conditions.

The emergence of globalisation and the (self-)destruction of Eastern Bloc/USSR has transformed the world into a dystopia. The way the global economy functions is only for the benefit of Multinational corporations.

It is no coincidence that we see the same negative trends emerging all over the world. The majority of manufacturing production that took place to high income regions (North America and Northern Europe) has been outsourced to low-cost low-tax destinations (China & other third world countries). Barriers of trade and protective tariffs have been eliminated and so called “free” trade agreements have been implemented (NAFTA, EU Trade area etc). Cheap foreign labour has been transferred in advanced economies in order to keep wage costs down. Welfare state is being dismantled and massive privatisation of public utilities and state owned corporations has taken place both in the Western countries but also in Asia, Latin America etc. The unemployment rate is very high in many advanced economies (USA, European countries etc) and job uncertainty is now the norm.
This process will continue as it is evident by the TTIP and TTP agreements that give MNCs more superpowers and further diminishes state sovereignty.

The main reason for the end of USSR was that the soviet elites (of late 1980s) wanted to integrate with the global capitalist economy and become “businessmen”.

According to Stephen Cohen, http://www.gorby.ru/en/presscenter/news/show_28867/
” those elites, in Russia and in other republics, were already seizing the great wealth of the Soviet state. They were now motivated by a will to property ownership. For this, of course, they no longer needed the old state or its salvation, Thus ended the Soviet state. And thus began the corrupt history of its Russian successor. ”

Putin is part of this elite and it is unlikely that he will ever reverse the (neoliberal) capitalist way of development. There are alternatives however such as the Russian Communist party but it is unlikely because the last time it came close to win the elections (at 1996), there was massive electoral fraud.

” 1) it has never been a full member of the TE and was only tolerated as an ‘extra’ member of the G7 within the G7+1 format, only as long as it was ready to accept the role assigned to it by the other members of the TE as a subordinate member. Furthermore, it was immediately ejected whenever it dared to defend its sovereignty;
2) its economic elite is not an integral part of the transnational economic elite, as Russia has no important TNCs and therefore does not exert any significant influence over the international economic institutions, which are actually controlled by the TE (IMF, WB, WTO etc.). Russia’s growth and development, as well as its technology, (unlike e.g. that of China), do not crucially depend on the activities of TNCs functioning on Russian soil. Yet Russian oligarchs, together with a significant part of the Russian political, academic and media elites, do aim for the fuller integration of Russia into the NWO, albeit believing erroneously that this could be done on a parity basis with the other members of the TE;
3) its political and military elites are excluded from the international decision-taking process and the international political/military institutions controlling it, such as NATO or even the UN. It was only thanks to its veto power that Russia has so far avoided even UN-sanctioned embargos etc.;
4) Russia’s voice is effectively excluded from the TE’s media and, as a result, the average citizen in the West and the countries controlled by the TE have almost no idea what is really going on in Ukraine, given the total control of the world media by the TE and its associates, as well as the inter-connected TNCs and media magnates. ”

But one thing is certain. As long as Russia is (partially) integrated and interconnected with the global neoliberal economy, it is highly unlikely that Russia will be able to retain its sovereignty and defend against western economic and military pressure. Unless there is a major reversal in Russian economic policies, It is certain that Russia will lose. ( Takis Fotopoulos – Russia at the crossroads http://www.inclusivedemocracy.org/journal/vol10/vol10_no1-2_Russia_at_the_crossroads.html )

And Putin seems to proceed with a program of privatisation, something very negative indeed.

According to Paul Craig Roberts ” Globalization was invented as a tool of American Empire. Russia should be shielding itself from globalization, not opening itself to it. Privatization is the vehicle to undercut economic sovereignty and increase profits by raising prices. ”

@xvg: Every single word is true.
But the “he is our hero” fraction believing in “saviours in the clouds” either cannot see this or (for some reason) doesn’t want to.

Communism was sold out for personal greed, not in all EasternBloc countries, but sadly it started in the most powerful countries (China after 1976 and CCCP after 1982), and the smaller countries who attempted to resist – such as East-Germany or Romania or Yugoslavia – got overrun and received no help from big brother, because it was no longer run be real communists, but by thieves.

And yes – Putin has no intention to reverse these developments.
Now after so many years I must admit this disappointing aspect to my own mind as a proven fact.

The so-called advanced ecomoies of America and the West in general are living off the labor of the rest of the world.

Most citizens in the advanced economies are parasities just like their elites. In the bigger scheme of things, most people in the USA are in the middle to upper income bracket on a planetary scale.

Compared to the billions of people in sub-Saharan Africa, large swathes of the peasantry and working class in Asia, Latin America, and the Middle East, Americans and Westerners in general as a populace live lives of obscene privilege and wealth.

The people of the “advance economies” comprise what is called the Golden Billion, which is a concept that you curiously never hear about in the West.

So pardon me, if I don’t give a damn about the whining of the priviledge citizens of the “advanced economies.” They are whining about getting a greater cut of the spoils of Empire.

Letting Kudrin help run Russian economy is exactly like letting wolf guard sheep. Perhaps poor Vladimir Vladimirovich is not all that his unquestioning admirers “blame” him to be, no? Sorry, just asking…

So, it seems this minor piece of news has generated much “I am disappointed and worried” comments.

I’d like to add to add to them – toughly.!!

I am so disappointed that I come here, to gain insight of an in-depth nature into “things Russian” and what do I find?? Western style “attack and claw down”.
Worse; more and more examples of Western thinking.
People who can’t think “outside the box” but instead operate from “what I see and know here is what is right for everywhere”.
You know, I dont have much of an opinion on this “Kudrin is Back” garbage.
To start with, he isn’t. Back. He isn’t Finance minister, nor as he dearly wished, Prime Minister. He isn’t’ even in Government. He has a minor advisory role, which Putin is free to completely ignore whenever he wants.
But why did Putin do it? Well, I dont know, and neither do any of the other “know it all” pundits rushing out with criticism of him here. We have NO access to reams of information; domestic intel, covert reports, discussions with various groups, info regarding the American undercover agents – more and more and more.
What information do we uncontrovertibly have?
Well, we know by now the kind of man Putin is as President; a strategist, highly intelligent, one who investigates dozens of lines of inquiry, who seeks information, who keeps his own counsel, who is immensely successful. A man who knows his country very well, its history, it’s people with their likes, hates, loves, and views. And who takes all this into account in making his decisions, decisions which he knows may have far ranging effects.
We know he is Mr. Infrastructure. Have so many forgotten the state Russia was in when he took the reins a mere 15 yrs ago? How many of you have looked at the massive amount of growth, infrastructure, building, that he has made happen?
And he is a man who has been doing his current job – or a minor variant of it – for 15 years, and has been phenomenally successful in that job.
And you who criticise, who are “disappointed in this choice” have …..what knowledge? those of you who come here – and elsewhere – to criticise a minor decision, and extrapolate it to virtually accuse this man of treason, of selling out, of worse?? What do you know of Russia, what have you done, ever, in your lives???

I dont have an opinion on this, not only because I have absolutely no knowledge on which to base and opinion, and I know it, but because from what knowledge I do have – that of the character of President Putin – I have every reason to believe that he knows what he is doing.
And also – its none of my damned business.
I am not Russian, I dont live there (yet) and I know nothing of the culture or people.
Perhaps those who come here throwing their “mud” at Putin could consider using their vast expertise in finance and domestic politics to criticise their own governments. If you’re writing from America, you certainly have much to work with.

Putin isn’t exactly selling out if he actually believes in liberalism. Besides, he probably made promises to various oligarchs over the years, and he seems to value a kind of individual diplomacy. The deal is they keep their loot.

It is not a secret that a lot of informed folks feel that Russia and the USSR want/wanted to integrate into the NWO, and that all the disputes are merely about the price. The West sees Russian elites the way they see Brazilian or Nigerian elites at best, and possibly considers them to be usurpers who “rightly” need to be replaced by people like Kasparov. If Russia could join the club, do you really think the Kremlin and parliament would refuse?

” Putin + Trump/Sanders + Corbyn – we could be seeing a real attempt to stop the rot. ”

Corbyn is a charlatan like the pseudo-leftist greek prime minister Tsipras.

Corbyn supports UK to remain in the EU, the most powerful authoritarian transnational institution that promotes economic globalisation in the European continent. Therefore, what other evidence do we need that Corbyn is a sell-out ?

Also the British Labour Party gets most of its funds by donations from Zionists. That’s why he fired Ken Livingstone even though his comment about Hitler was correct. The Zionists Jews threatened to stop the donations and Corbyn obeyed them like a puppy.

“Tax havens and monopolies/mergers are key issues at the global level.”
Bingo Eimar. You correctly identified The Game is so few words. Join The Club and we let you steal all you want and have a “legal” place to park the stolen loot away from your people !!!!

yes. Absolutely. Few are “Atlanticists”. Most remember the 1990’s. And The Nationalists, Putin, Ivanov etc wouldn’t let them.
They aren’t all traitors, and thats what selling out to the NWO would constitute.

“As Paul Coelho said, “The two worst strategic mistakes to make are acting prematurely and letting an opportunity slip; to avoid this, the warrior treats each situation as if it were unique and never resorts to formulae, recipes ……..or other people’s opinions”.

So, the tragic reality is that Rubles cannot be emitted in proportion to the needs of the economy. Also, rubles cannot channel (plumbing) appropriately, toward the commons, and toward the benefit of the greater good.

Dollars won in exchange for oil only found their way to the Treasury only after Putin put in a tax. This is the great economic secret of Putin, yet is only a minor tinkering of the system.

Before the tax, those dollars would find their way to dollar zones to then buy overseas goods.and Dollars immediately leave the country, allowing Oligarchy to form. (Those who had control over the land and the ability to extract minerals could then buy dollars. Average Russian labor is left out of this equation.)

Here is an excerpt from from Starikov:

In order to understand what is happening around you today, you have to realise three things, and they should be understood in combination.

1. The keystone of the modern financial world is the dominant part of the dollar. That means that all prices in world economy are only defined in dollars. Oil, gas, gold, aluminium etc. are only sold for dollars. All natural resources, all metals and all their derivatives. That means that it is in dollars that prices for production are defined. To put it short, everything, nearly everything that is sold at the global market, is only sold for dollars. This is how world economy works. If you want to buy gas or nickel — get your dollars out. It is impossible to buy them for euros or Norwegian Kroner. you have to exchange your currency for dollars. And that means creating extra demand for them. And that is not all.

2. Not only is the dollar the main means of payment in today’s international trade but it is also the main means of savings. And by that it is not private savings of people around the world that are meant but savings of countries themselves. The so-called gold and foreign currency reserves.
Whichever country you take — it will have less gold in the reserves than currency.

Therefore it would be more sensible to call such reserves foreign

But you had better get used to it — in the financial mirror-world all terms are designed to confuse the situation rather than make things clear.

It is not the United States of America but a private institution called the Federal Reserve System of the USA that issues the main currency of the world.

Private initiative has nothing to do with it. The US dollar just does not belong to the USA. The fact that the dollar is issued by a private institution is even stated on the dollar bill. But who reads that? Meanwhile, it says everything quite clearly. No one hides anything. American money says nowadays: Federal Reserve Note

————-
The U.S. is a Golem that responds to privately issued money and debt, especially after 1913. This financial parasitism of money powers won in WW2. Bretton Woods institutions such as IMF and World Bank are elements of this system plumbing.

Russian central bank adopted Bretton Woods methods (reserve loops in foreign exchange and gold) during Yeltsin’s years, and it became indurated into Russia’s Constitution..

The tragedy is that Russia is monetarily dependent and hence not sovereign. This fatal reality constrains the movements of Russian polity.

Taking on the Atlantacists means taking on the post Bretton Woods dollar as reserve system, which will elicit a reaction from psycopathic banker elites with their fingers on a nuclear trigger.

Difficult to add much to the very good comments in this thread. It’s difficult for me to understand the strategy that Putin is pursuing. Foreign debt and investment is ultimately a trap. Paying down Russian debt is a good strategy in that regard.

However, if Russia chooses to implement the Washington consensus neoliberal strategy a return to the Yeltsin years is inevitable. Moreover, Putin personally will never be acceptable to the international oligarchy. The primary goal of the current anti-Russian policy is, in my opinion, to force a Moscow color revolution resulting in his removal.

It would not surprise me if Putin had been told that attempting to reverse the changes in Russian financial and economic structures implemented during the Yeltsin years, such as nationalizing the Russian central bank, would be considered an act of war. Michael Hudson has revealed that the Saudis are required to recycle oil profits into the US economy. Failure to do so would be considered an act of war and result in regime change.

Recycle petrodollars into Western Banks and Markets, especially those in the dollar zones. This is the most important and least understood aspect of the agreement. Note that Saudi does not have an independent monetary system.

Petroleum must be priced in DOLLARS!

Allowed to Cartelize i.e. monopoly pricing via OPEC.

Saudi Kingdom rulers are sanctioned as legitimate, even though they came to power in a coup.

Wahhabi Sunni Islam is sanctioned as a byproduct. This form of Islam was perfected post Medina, among the Bedouin

Front line military gear, like AWAC’s and F16’s are allowed for Saudi to integrate.. (Contracts must be enforced)

Fifth fleet, supported by American Taxpayers, is used to ensure oil transshipment, hence Saudi have access to dollar markets made ready for them.

The terms of this agreement have very serious implications. Namely, what happens when the Saudi oil fields hit peak production and these capital flows begin to taper off. Perhaps this has already occurred.

Moreover, given this agreement with the Saudis, one wonders what was agreed to by the Russians. Particularly in the Yeltsin years. One can’t help but think that attempts to secure the continuation of the exploitation of Russian resources must have been made, especially since this was a sought-after goal ever since the advent of the Soviet system.

Some very good comments I’ve read here. But its important to remember (actually,the “single” most important thing to remember.),that all of these problems and economic “rules” were created by “man”. Not by God,but by man,no matter how some may think. So that means they can be changed ,by “man” as well. And a “new” trading system put in there place.

Saker, and commentators
You need to go and read the article by John Helmet on Dances with Bears blog.
No offence to Alexander but he over emphasises the role that Kudrin had been offered. It is a role on a think tank it is not a role in the govt.
John helmet explains the background to this offer which was made to Kudrin in 2013 and rejected. Putins view of him has not changed It is Kudrin who has realised he big going to be offered s better role.
I would also like to tell all the fair weather friends who comment here to go and read the article. The rush to condemn Putin is astonishing but not a surprise!
Alexander should read it too then he will understand What it is that Kudrin has been offered.
****I repeat go and read John Helmer on the Dances with Bears website and scroll down to the article about Kudrin

I also think that Scott ( http://thesaker.is/waiting-for-yalta-2-or-what-the-kerry-lavrov-pact-brings-to-the-table-by-scott/) has correctly indicated that Putin and Russia (in tandem with Xi and China et al) is in the process of reducing the US (actually the Anglo-USraelis and NATO) down to size.
Much of our problem is that we cannot know and hence can’t understand all that is going on behind the public facade of geopolitical relations and global economics. For instance, what do we know about possible assistance being given to Russia by the OITC?

What is obvious though, is that Russia has extremely superior military capabilities and if push comes to shove Russia will (reluctantly) demonstrate that superiority in relation to the US war machine.

Arguably also, Putin has never wanted to “join” the NWO. He and Russia merely wanted to relate to and trade with Europe and the US on equal and equitable terms.

In my view, far from being enveloped or overcome by the Judaic (Anglo-USraeli) Empire, Russia and its partners are about to eliminate that Empire permanently.

IMHO, Putin, like Trump, is a Christed individual who is here to assist in the liberation of humanity from the Talmudic global matrix controllers who have enslaved most of humanity in what is now a global dystopia.
Peace and Blessings,
Ron
*************

Kudrin has destroyed Russian manufacturing sector and propped the banking sector to the detriment of the middle class in Russia. His views and not much different from US neocons. It seems like Russia is heading for jobless recovery like US which is no recover at all.

I think that most of us didn’t even know about Kudrin, let alone what he did, does or stands for.
However, the “Romanticists” (good word), look for signs that confirm or erode our hopes for Russia. For we cling to the dream that, out of Russia, may come a kind of effective ideological and practical counter-offensive against the f…g neo-liberal philosophy, with its attendant visible, measurable and inevitable results.

Therefore, emotionally, we react negatively to news that seems to openly contradict our hopes. Shakespeare would say, “Men judge by the complexion of the sky, the state and inclination of the day.” And if the complexion looks dark, we respond accordingly.

Something is still unfathomable to me. Namely, given that,
1) Russia is a world in itself.
2) It can or could amply survive on its natural resources and the resourcefulness of her people.
3) It has a good education system
4) It is at the forefront of just about all major technical and scientific fields of research and discovery.
5) It has a formidable defense structure and infrastructure.
… it is not utopian to believe that Russia can be self-sufficient, almost completely autarchic, if it just wanted to.
If Lenin and comrades were able to create a Soviet Union in conditions much worse than the current, what stops today’s Russia from becoming a truly independent nation?

Incidentally, for those who get a skin rash when mentioning Lenin, Stalin and the Soviet Union, the first proto-Leninist was Tolstoy.

And yet, notwithstanding all of the above, Russia seems to kowtow to the exceptional state and its puppets – and showing a totally undeserved reverence.

Strive as I may, I cannot see the sense or the advantage. The Kremlin keeps calling the US and its puppets “partners.” Partners my ass, I say. Look at the character whom the Jew York Times and the Zionists have already crowned as the next president of the exceptional nation. https://www.youtube.com/watch?v=Fgcd1ghag5Y

I still wish to disbelieve that those who run the politics of Russia want to make of it a MacShit copy of the “greatest nation on earth”

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